Gov't sells P62.988B worth of 25-yr RTBs

MANILA, Philippines - The Philippines sold an initial P62.988 billion in 25-year retail treasury bonds (RTBs) at a coupon rate of 6.125 percent in a price-setting auction yesterday, marking the first time that the country has issued retail debt papers in this tenor.

The P62.988 billion is more than double the minimum issue size of P30 billion, reflecting strong demand for the debt paper and boosting the possibility that total volume to be sold within the next two weeks may exceed the P179.9 billion in RTBs sold in February, said Deputy Treasurer Eduardo Mendiola.

“We can go P100 billion, P150 billion or P200 billion because we want all who want to invest to be serviced,” he said.

The bonds will be sold to the public until Oct. 22 to 23 selling agents led by issue managers, the Land Bank of the Philippines and Development Bank of the Philippines.

Mendiola welcomed the results, saying that the P76.508 billion worth of tenders is a reflection of strong investor interest in retail debt.

 “I’m very happy with the results. The 6.125 percent is more or less aligned with secondary market rates,” he said, referring to the so-called aftermarket in which previously issued financial instruments are traded.

He said RTBs are very liquid and that more and more retail investors are aware that these can be sold in the secondary market.

Mendiola said the Treasury would set a daily cap throughout the two-week offer period to accommodate all those who want to buy the debt paper, which is available for as low as P5,000.

 “We can see there’s so much demand so we will try to accommodate all investors who want to invest,” he said.

Because of the anticipated strong demand for RTBs, the government may reduce the domestic borrowing program for the first quarter of 2013.

 “If we get a lot, we may have to reduce the borrowing program for 2013,” he said.

In the fourth quarter of the year, the government has programmed to borrow P90 billion from the local debt market through the issuance of Treasury bills and bonds. This is lower than the third quarter borrowing program of P108 billion, second quarter’s P106 billion and the P117-billion debt plan in the first quarter.

RTBs are ideal options for retail investors who want to park their funds in government debt papers.

Asked what the government would do with the proceeds of the RTBs, Mendiola said this would be used for general funding requirements such as social services, infrastructure and debt servicing.

The rest of the 23 selling agents for the RTBs are Allied Banking Corp., ANZ Banking Group Limited, BDO Capital and Investment Corp., BDO Universal Bank, BPI Capital and Investment Corp., China Banking Corp., Chinatrust Banking Corp., Chinatrust Philippines Commercial Banking Corp., Citibank, Deutsche Bank, Eastwest Banking Corp., First Metro Investment Corp., Hongkong and Shanghai Banking Corp., ING Bank, Maybank Philippines, Metropolitan Bank & Trust Company, Philippine National Bank, Rizal Commercial Banking Corp., Security Bank, Standard Chartered Bank, Sterling Bank of Asia and Union Bank of the Philippines.